Keep Tomorrowland free of higher taxes

July 5, 2015 | By ORANGE COUNTY REGISTER EDITORIAL

Tuesday, the Anaheim City Council will consider a major agreement with Orange County’s largest employer, Disneyland, that will have economic and cultural impacts on the city and county, likely for generations to come.

Nearly 20 years ago, the city entered into a contract with the park operator not to impose what has been called a “gate tax,” or a direct tax on ticket sales, at Disneyland. That agreement is nearing expiration, and Disney would like to see it renewed, in return for a commitment to build $1 billion or more worth of improvements in the parks or on adjacent Disney properties.

Anaheim’s City Council should support this proposal. It’s good for the local economy and renews a commitment from Anaheim that low taxation improves the business climate and economic vitality of the community.

Also it sends an important message that any targeted tax against Disneyland – or any other business – be it a gate tax or any other, would be unfair.

What is likely to make some people uncomfortable, however, is a provision in the agreement that stipulates that, if a gate tax ever is imposed – whether by a future city ordinance or by ballot measure – the city would have to reimburse Disney for the full cost of the tax. If passed by the council, this agreement would be in effect for 30-45 years.

This particular provision, while raising eyebrows at first impression, is actually the only assurance Disney would have that the contract with the city would be upheld if the company makes a considerable capital investment.

While Disney would certainly invest in its properties with or without an agreement with the city, such a deal would allow it to mitigate the risk of a future council capriciously imposing a punitive tax simply because it can. This would allow Disney to focus on the normal market risk that any company must bear, and likely make a larger investment than it would if it had to fear that the city was going to target the company. This will benefit not only Disney, but its employees and visitors to the park, who would ultimately bear the burden of any gate tax.

If the council affirms the agreement Tuesday, the city should also move swiftly to offer similar benefits to all other entertainment businesses in the community, from miniature golf to movie theaters and beyond. Anaheim is an entertainment destination and would further solidify that reputation by also banning entertainment taxes within the city’s borders. It would also be the equitable thing to do, and make it clear that the city does not show favoritism.

Even still, opponents of the agreement, including Mayor Tom Tait, contend that such a contract will burden future generations of voters with promises made today and tie the city’s hands in hard times when it might need additional tax revenue. There is respectful disagreement on this point, however.

The agreement is one that doesn’t push off a burden so much as prevent one. Disneyland, or any other private enterprise, is not an ATM for city government. If times really got so bad as to warrant a gate tax, the city, with its sizeable pension debt and overpromised building projects, would have no one to blame but itself.

Anaheim would do well by its residents to approve this plan. Similarly, Disneyland has an opportunity and responsibility to, while expanding, illustrate how it is a good neighbor and invested partner in the future of the entire city. This ought to be a win-win.